A Preliminary Feasibility Study on Natural Marble Making

and Free Zones
Page 1 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
General Authority for Investments and Free Zones
Economic Performance Sector
General Department of Economic Feasibility Studies
and Free Zones
Page 2 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
Contents
II. Basic Information ............................................................................................................. 4
III. The Preliminary Feasibility Study and the Reason Behind Selecting the Project Idea .. 5
IV. Marketing Study .............................................................................................................. 6
VII. Project Technical and Engineering Feasibility Study .................................................. 13
VIII. Financial Study ........................................................................................................... 26
X. Results and Recommendations ....................................................................................... 45
and Free Zones
Page 3 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
I. General Introduction to the Activity under Study Marble is one of the types of limestone rocks that are extracted from earth, and it is one of
the metamorphic rocks that are formed by weather factors such as the effect of pressure and
heat together, and marble is extracted from specialized quarries using special equipment and
mechanisms.
Marble is one of the most used stones in our daily lives and is used for construction and final
finishes. The most common uses of marble are in the floors of homes, walls, exteriors of
buildings, the bottom of walls, stairs, bathrooms, washbasins, columns, kitchens and
shelves. However, it is known for its high price (compared to alternative products), which
is not allowed to be available to everyone, Extracting it requires effort, equipment and high
labor wages.
The technological development in the equipment used to manufacture and form natural
marble has contributed to the multiplicity of its own products, which increased the
importance of this activity, as its use is not limited to processed marble slabs, but the
products have varied from balusters, decorative forms, columns, stairs, basins, vases,
holders, and stones for binding and decorations, internal or external, that all of them are
characterized by originality and sophistication, which everyone seeks to acquire
The climate in Egypt is good for practicing the activity of manufacturing natural marble,
with the presence of quarries and natural mountains, and what Egypt abounds in have
enabled multiple sources of limestone that produce marble, in addition to the availability of
all the physical and environmental resistances necessary for this activity. The volume of
Egypt’s exports of marble according to the latest statement issued by the Export Council for
Building Materials, Refractory & Metallurgy Industries – ECBM (end of 2018) is about 2
million tonnes, at a value of EGP 4 billion, while imports amounted to nearly 700 thousand
tonnes, at a value of EGP 2.5 billion.
and Free Zones
Page 4 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
II. Basic Information
Land Area 40,000 m2 in Minya Governorate adjacent to
marble quarries
countertops, and decorative works from
natural marble
Expected Investment
exchange rate of EGP16.5/dollar)
growth rate.
Break-even Sales
Expected Annual
growth rate.
Expected Internal Rate
Payback Period (PBP) Two years and 11 months
and Free Zones
Page 5 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
III. The Preliminary Feasibility Study and the Reason Behind Selecting
the Project Idea The activity of marble manufacturing is one of the important activities, which the State has
increased its interest in recently, and it has provided it with all means of support to develop
and maximize its return. The idea of the project comes due to the continuous increase in
demand in the construction sector and the huge boom in various industrial and housing fields
due to the development and urbaniazation in the country, in which the construction field
needs marble products that leads to an increase in demand for marble products
In light of the great boom and progress that this industry has witnessed in scientific and
technical research related to production, as well as the development of its means of
transportation and logistics, which helped to penetrate the global markets as well as the local
markets leading to the spread of this type of projects that have economic feasibility.
Factors enhance the trend of marble manufacturing activity in Egypt
The availability of natural quarries that provide limestone in high-quality quantities
and qualities that help in the production of marble in the appropriate shape and
quality.
Availability of the necessary industrial land areas and the state's interest in providing
the necessary facilities for the development of this industry.
Availability of export ports, transportation and logistics for that industry.
The State's interest in accessing foreign markets for this activity and granting
facilitiations and support for export in order to save hard currency.
The initial justification for the economic feasibility of the project
The increasing demand for natural marble products.
The success of similar projects invested in this field.
There is a demand for marble to meet the needs of the local market, as well as the
broad needs of the global market.
Ease of obtaining the necessary land for this activity.
Availability of skilled labor at reasonable prices.
The possibility of recycling and operating the water used in production, which
reduces costs.
High rates of return on the project, which may exceed 40% in some projects
and Free Zones
Page 6 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
IV. Marketing Study General Market Indicators (SWOT Analysis):
1. Opportunities
Manufacturing natural marble is one of the most important mining projects due to its
many advantages as it can benefit from the abundant limestone that is formed by
natural factors in the Egyptian lands, where there are various marble quarries that
provide various types of natural marble with specifications and quality that help in
producing high quality natural marble products with less waste.
Suitable prices for marble blocks extracted from different quarries help reduce
production costs and achieve competitive advantages for the Egyptian marble
product.
Availability of suitable lands for this activity, in appropriate surface areas, and at
preferential prices, in light of the State’s encouragement for this activity, as well as
the provision of the necessary facilities for those lands.
The existence of a marketing gap in the local market in light of the continuous
development and the comprehensive urbanization it is witnessing, whether for
industrial or residential projects and the expansion of new cities, which indicates
expectations of increased demand.
Having an appropriate market share in the global market, where Egypt exports to
more than 100 countries around the world, and it is expected to increase in light of
the country’s international agreements to facilitate international trade and access to
global markets, and this helps by owning the appropriate technology to produce high
quality products that compete in the international market with reasonable prices
The State provides the necessary financing for these projects through the initiatives
of the Central Bank of Egypt.
The State's imposition of duties on the export of raw marble blocks, which helped in
its availability for local manufacturing.
The State provides packages of government support programs, customs exemptions
(for new imported machines), tax exemptions (according to the investment cost), and
export support programs in case of production for export, in a way that encourages
investment in that field.
Egypt's favorable geographical location, which helps it access all world markets at
low costs through ports spread throughout the State.
and Free Zones
Page 7 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
2. Threats
Some technical defects that may be in blocks of marble extracted from quarries
because quarries lack of modern technology for extraction, however this can be
overcome by performing some preliminary treatments on raw marble blocks before
using them in production as well as screening and selection processes for suppliers.
There is a strong local competition, especially with the presence of a large number of
trained Chinese workers, possessing the latest technology, and working locally for
the purpose of exporting abroad.
There is a strong international competition from a number of marble exporting
countries such as India, China and Turkey, which are trying to increase their shares
in the global market, however the Egyptian product is characterized by its low price
compared to the competitors to achieve a competitive advantage to enable the product
to compete in the global market, provided it is presented with the appropriate quality,
as well as easy access to international markets due to Egypt's geographical location.
There is a competition from alternative products to marble (such as artificial marble,
ceramics, stones … etc.).
High energy costs and the lack of hard currency used to import the latest required
technologies.
The absence of international exhibitions held in Egypt, similar to international
exhibitions that help in marketing and accession to global markets.
and Free Zones
Page 8 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
3. Strengths
The project is adjacent to the quarries for easy access to the raw material.
Availability of trained technical workers at proper wages.
The project owns the latest technology available in the field of marble manufacturing,
which helps in the production of natural marble in accordance with international
standards that help it to penetrate global markets and achieve a competitive advantage
in light of its competitive price.
The reliable good reputation of Egyptian marble, gaining advantage of the low
exchange rate to present the product in the global markets.
Relying on a closed cycle to supply the project with water, which helps to reuse it and
save costs.
Have the appropriate financing to meet operating costs.
The possibility of utilizing solid manufacturing waste in the production of marble
crafts and decorative works in light of owning the appropriate technology, as well as
the possibility of owning a production line to recycle smaller solid waste and the
marble abrasor in the manufacture of artificial marble.
Proximity to the Upper Egypt region to export the product.
4. Weaknesses
Operational risks and work accidents and injuries in the absence of technical know-
how, however they can be tackled by following security and safety instructions and
using appropriate protection means.
The difficulty of obtaining the necessary water in some areas, and this can be
overcome by owning the appropriate tanks to own a closed toilet that helps recycling
and achieve the project's sufficiency from it.
High transportation costs to distant markets, especially with the size and weight of
marble.
Increased prices for energy, oils and fuels used in machinery and equipment.
Pollution problems caused by the project, and this can be overcome by using air
purification filters and silos to collect the shanties for reuse and recycling.
The problem of the availability of large quantities of solid manufacturing waste, and
this can be overcome by owning a production line for recycling solid waste.
SWOT Analysis Outcomes
It is clear from the previous analysis the possibility of using strengths to address the external
threats with the presence of great opportunities in the market as well as the possibility of
overcoming weaknesses by following modern scientific methods.
and Free Zones
Page 9 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
Marketing Study Conclusion
1. Demand Volume:
The demand for Egyptian marble in the local market has increased, especially after the rise
in the prices of imported marble as a result of the liberalization of the exchange rate.
Moreover, research predicts a rise in demand for marble in light of the boom that the country
is witnessing from a comprehensive social and urban development including residential and
industrial constructions, all of which lead to an increase in demand for marble products.
In addition to the increase in external demand and the existence of opportunities for export
in the event that the project focuses on production in accordance with international
specifications appropriate to foreign markets and maintaining the competitive price of the
Egyptian product, with the state’s intervention in organizing international exhibitions and
forums that help producers reach the largest segment of consumers in the world.
2. Supply Volume:
The market still has a gap, especially with the increase in the population and the lack of
supply having high quality specifications. In addition to the potential for exporting around
the world to many countries lacking the natural quarries Egypt has.
3. Potential Competition
Competition in this field is characterized by two types, and it is possible to undertake the
appropriate strategies according to the marketing direction, which is either price competition
with large-scale production or competition in quality and production with high
specifications that fit a segment needs such specifications.
4. Distribution Outlets
Marketing marble products may require a marketing effort by making pamphlets and
brochures that explain to the consumer the nature of the product, the difference between it
and other products, and its advantages, which the project may target to achieve a competitive
advantage in the local and international markets. Advantages could be the product quality
including finishing, color homogeneity, and durability; as well price, innovation in designs
and colors to satisfy the consumers.
Marketing is carried out by targeting a number of entities and following the below
procedures:
Wholesalers in decoration for the end consumer
Distributing samples of the product to furniture sales' halls and decoration business
centers
and Free Zones
Page 10 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
Participation in government departments tenders (for public uses, new cities and
urban development)
Sales representatives for direct sales in conjunction with the finishing and contracting
engineers
Direct selling by setting up several distribution centers in different governorates
locally
Providing a network of international agents to access global markets
Organizing various exhibitions and forums through the Marble Manufacturers
Association and the Egyptian Export Council for Building Materials, Refractories and
Metal Industries.
5. Products, expected sales volume and prices during the fiscal year
According to the prevailing in this type of industry, the attached prices are indicative and
in light of the normal rates, and may be subject to modification according to the date of the
study.
It can be summarized during the annual production cycle according to the following table
Product Unit of
Natural marble,
treated M2
It is suggested to add it as a production line as a second stage in
case of owning the appropriate technology for those chemical
treatments that give added value to products and form them with
other colors and dyes.
Artificial marble M2
It is suggested to add it as a production line as a second stage to
expand to benefit from the previous products and perform
appropriate chemical treatments.
6. Expected Costs of Marketing Campaigns
- In order to achieve the spread, especially at the beginning of the project, the
annual costs of the marketing campaign are estimated at EGP1 million (only
EGP one million).
and Free Zones
Page 11 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
V. Project Legal Feasibility Study
Natural marble manufacturign activity is one of the mining activities subjected to the
Investment Law provisions where the State encourages and provide incentives to it.
Companies established for such purpose may be incorporated in accordance to the
provisions of the Investment Law, Companies Law, and Commerce Law as per the
desire of the owners.
There are some legal determinants that should be considered in respect of obtaining
the license-to-operate from certain entities, namely:
The Governorate having the jurisdiction over the land, and the local units affiliated
thereto or the Government Office.
Egyptian Mineral Resources Authority (EMRA).
Ministry of Antiquities
Egyptian Environmental Affairs Agency (EEAA)
The requirements of Civil Defense Authority
Industrial Development Authority
Validity certificate from the Housing and Building Materials Research Center in Cairo
(HBRC)
In the event of exportation, the project shall obtain the Import and Export Card from
Export Development Authority (EDA), specifying the nature and specification of the
products dealt with. Such Import and Export Card can be modified by adding different
items the project produces, provided that the project capital is not less than EGP two
million, or it is exported through an intermediary company that will undertake on behalf
of the project the procedures for export and customs release.
Incorporation costs and obtainment of the required licenses can be estimated as:
The costs of pre-activity, incorporation and licensing are estimated at EGP 500
and Free Zones
Page 12 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
VI. Project Environmental Feasibility Study:
The project is classified within the list of projects of Gray Area (B), and the environmental
impact assessment of the project is required according to the environmental classification
model (B) and the requirements of the Environmental Law. The project must take into
account the environmental requirements for this activity, which stipulate many points due
to the special nature of the activity:
Consider the quality of the water used and carry out the necessary treatments for any
plankton or impurities by adding filters and primary treatment plants for water used
in production.
Consider the requirements of the environment in providing a ventilation and
automatic intake system to reduce concentrations of suspended particles (inhaled) by
preventing the spread of dust and waste polluting the environment, which needs to
install special filters to purify the air to preserve the environment.
Ascertain the presence of a waste disposal system that conforms to the requirements
of the environment, taking into account the appropriate disposal of solid and filings
waste resulting from marble cutting and manufacturing operations, and it is
recommended to own complementary production lines that can exploit these wastes
in the manufacture of other products as well as the manufacture of industrial marble.
Consider the requirements of the environment in the installation of exhaust filters on
used irrigation equipment and machinery in a way that does not harm the
environment.
Provide the necessary sources of natural ventilation.
Consider the disposal of used chemicals in accordance with the appropriate methods
in a manner that does not harm the environment, with the possibility of contracting
with contractors who may be able to supply those materials to factories that may need
them in recycling.
Continuous evaluation and permanent review of the means used to reduce the
environmental impact, along with an appropriate training to labor to reduce waste
and the rate of solid waste in a way that works to preserve the environment as well
as maximizing the benefit of Egypt's natural resources.
and Free Zones
Page 13 of 46
GAFI Translation Department–Tel. + 2026736900-5. Ext: 2745 – 2748, Fax: 2745. -Mob. 201114650550 Email: [email protected]
VII. Project Technical and Engineering Feasibility Study
Project Setting up and Operating Stages
1. Choose the appropriate location to set up the project.
2. Obtain the licenses and permits required to practice the activity.
3. Setting up the external land fences, security rooms, electricity and transformers.
4. Building gallons for production and storage sheds for raw materials and finished
products.
6. Construction and installation of closed-cycle water tanks
7. Building and installing silos needed to collect filings and impurities.
8. Establishing the administrative and social building for employees
9. Determining the required devices and equipment, determining the specifications of each
equipment, where to get them and the required number for each equipment
10. Supply and installation of machinery, equipment and means of civil defense
11. Building an industrial sewage treatment unit and supplying its pumps and equipment,
as well as supplying and installing filters for impurities.
12. Supply of…